You have been engaged for the audit of the Upper X Company for the year ended December
Question:
You have been engaged for the audit of the Upper X Company for the year ended December 31, 2016. The Upper X Company is in the wholesale chemical business and makes all sales at 25 % over cost. Following are portions of the client's sales and purchases accounts for the calendar year 2016.
You observed the physical inventory of goods in the warehouse on December 31, 2016, and were satisfied that it was properly taken. When performing a sales and purchases cutoff test, you found that at December 31, 2016, the last receiving report that had been used was no. 1063 and that no shipments have been made on any sales invoices with numbers larger than no. 968. You also obtained the following additional information:
Financial Accounting
ISBN: 978-1118978085
IFRS 3rd edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso